In the early 2000s, GE started pushing towards reaching underserved markets in the industry. During this initiative, GE began to a strong push towards penetrating the MENAT region. Even though entering emerging markets can be challenging, GE had a strategic plan for introducing and establishing itself.
There are many advantages to doing business in an emerging market. For example, emerging markets are associated with a growing upper class, which causes an increase in demand for either new types of luxury goods. During the United States Great Recession, expanding beyond the North American market was a necessity. Luxury goods companies needed to find a market with good purchasing power.
“The financial crisis shifted the attention of GE more towards the MENAT region as a haven for safer investments and as a region with huge potential for growth. One of the factors that contributed towards this perception was the fact that the MENAT region was the least affected by the financial crisis due to minimal investments in risky securities and a solid outlook for growth over the coming few years.” (Ivey,pg5). In case of a recession, a firm’s presence on other markets softens the adverse financial effects; it is all about diversifying. There is also less competition in emerging markets. Companies that move first to these regions have the opportunity to establish their brand and build loyalty with their customer base.
Even though it may be difficult and costly to enter a market known for corruption and political instability, financial gains may outweigh such difficulties. In the case of GE, it made sense to join the MENAT market and take advantage of rising economies, high purchasing power, and low competition.
“Being a late entrant, GE needed to find optimal means to gain market share, secure access to the supply chain and distribution channels, and establish a customer base. This was also challenging on a country-to-country basis in terms of finding the right talent, complying with local regulations, and winning against established competition.” (Ivey,pg6) GE was able to navigate the MENAT market admirably while remaining true to its corporate values. GE refused to engage in bribery and corrupt business methods. Then, they were able to gain consumer loyalty in the region. GE’s strategy to penetrate this market was a long term strategy over several years. They had to follow a country-to-country approach, comply, and establish themselves in each country of the region. By continuously having high corporate standards, GE sets an example in the area to be the primary go-to partner. With this reputation, they continue growing.
GE MENAT should be continuously looking for talented local scholars. The region has limited access to skillful, educated workers. Companies must be competitive to obtain the right talent. By becoming involved in the education system, they can build a great relationship with students and shape them as they continue their education with the GE corporate standards. This will make the market of highly educated and innovative students available in the workforce in the region.
GE MENAT will have to invest more in training programs, particularly in the STEM field. As they continue to grow in the region, they also must incorporate more ethics and corporate values training. In the end, one incident can significantly affect the company’s reputation.
All in all, GE must continue enforcing its corporate values and keep a clean, corporate image. To continue being competitive, they must look for above-average talent and cultivate relationships with local companies and governments. The MENAT region may have common characteristics, but each country has to be managed on its own.